Jon Wild is the Vice President for Marketing in North America at Groupon and he discusses the lessons from his time as General Manager of Brand and Advertising at Telstra through to launching and growing online platform HotelClub and now at Groupon. He shares his thoughts and experiences on marketing for brands, driving growth and delivering business objectives.
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Transcription:
Darren:
Welcome to Managing Marketing and today I’m sitting down with Jon Wild who I first met when he was general manager of brand and advertising at Telstra. He then went on to be director of marketing at Hotel Club, and most recently was the vice-president of marketing in North America for Groupon. Welcome back to Sydney, Jon.
Jon:
Thanks, Darren, it’s lovely to be back. It’s lovely to see Sydney through a new lens. It’s in my opinion the best city in the world.
Darren:
Well, I think a lot of people would agree with that. Whereabouts in America are you?
Jon:
Chicago.
Darren:
The windy city.
Jon:
Often described as the windy city not because of the weather but because back in the day their politicians were more wordy than New York politicians.
Darren:
Oh, I thought it was the wind that came down from Canada across the lakes would have a chill in it but that makes sense. It was at Telstra wasn’t it, during the Sol Trujillo days that you were general manager of brand and advertising.
Jon:
It was indeed. I actually had a wonderful time and very good memories of my time at Telstra. I think what Sol Trujillo was trying to do was organise the business along customer segments. Organisational theory is generally cyclical.
I’ve seen vertical functions and horizontal businesses, and customer segmentation was the first time I’d experienced a business try and build different PNLs around different customer segments.
Darren:
That was major shift for Telstra because it had traditionally been a very product service vertical and suddenly he was trying to tip it on its side so it thought about being, oh my god, customer centric.
Jon:
Yeah, exactly. And I think part of that was just to remind people that we serve customers as opposed to technology, shareholders or some other master. It is probably of the three models the most complex to get right, partly because you’re putting functions together but it’s also based on a premise that each segment consumes media in a very different space and mindset than the others.
So you can actually get to the point where you have differentiated-value based pricing and a completely different experience for each customer segment.
Darren:
Potentially.
Jon:
That’s the theory. And I think this is where most brand marketing falls down is that people think it’s a series of beautiful ads and communications and the way things look. And to me, a brand is way deeper than that. To paraphrase Ogilvy, a brand is a promise delivered.
Darren:
Does it feel like a lifetime ago to you?
Jon:
More than lifetime ago.
Darren:
A lot has changed hasn’t it? That period, even your title, general manager of brand and advertising, in many ways feels like a 20th century construct. You’ve got brand and you’re going to do advertising as if they were the only two parts to the marketing function.
Jon:
Telstra, by its nature, was fairly bureaucratic and obviously had a very public service orientation in the way it was structured and its titles, and it was very hierarchical and everyone had their own role and you didn’t want to step on anyone’s toes.
Darren:
But it’s also a view of marketing that I think still persists in a lot of very large organisations, maybe more so in Australia than other markets, but that is that marketing is more about comms, the promotions part of marketing than it is the full customer experience.
Jon:
Agreed. In fact, it does change as you move into digital businesses but certainly at Telstra there are very distinct roles. It was almost like it was a production facility where brand put their spin on things and then the media team and then the various other teams before you executed the campaign.
The product teams who were out there building products and services didn’t really interact with the retail team who were building direct customer experiences. It was a very disconnected customer experience. It was almost ironic in a sense; we were trying to organise around a customer yet we were still delivering a very fragmented customer experience that was often very different based on the function it was coming from.
Darren:
I remember we helped Telstra with a media review at the time and it was just after that they moved from having the Telstra shop to having the T shop—this idea that the retail function needed to be structured in a way that acknowledged that there were such diverse groups of customer segments.
Jon:
We even started using the segment names within stations within the shop. I still look at that shop and chuckle because you have the Apple store and they got retailing right and I’m not sure Telstra did and it’s a very stark reminder of that particular outcome.
Darren:
Now, you went from that role at Telstra and as you say, ‘happy memories’ but you really did quite a quantum leap, from my perspective, a career perspective, because that was quite a traditional structure, a traditional brand, into a brand called hotel club, which was in a way a tech company wasn’t it?
Jon:
It was and it was a deliberate choice because at the time (and I’m showing my age now) there was a thing called Google, and it was suddenly taking people’s attention and starting to take media dollars away from traditional media.
I’ll also say that one of the things that really irks me is brand marketers over the years have done themselves a real disservice; they’ve typically pigeonholed brand marketing as unmeasurable or intangible or emotional and, as a result, the C-Suite has lost faith in building brands.
We’ll come back to that but this notion of measurability has become more and more important in marketing. I wanted to move to a business that was at the other end of the spectrum where 100% of their marketing was transactional and it was online travel, which at that point was a very mature online category.
And it’s a marketplace; you’re selling the same stuff for the same price.
Darren:
But I think you’re doing yourself a disservice because Hotel Club also built a brand and I know because I was a customer at the time. In fact part of that was you taking that role—I remember you said, ‘try it out’. Try it out was literally your sales pitch. And now 10 years later.
Jon:
It was sold to Expedia as part of Orbitz for 12 billion dollars. In that particular scenario we made a conscious choice. Our brand dollars weren’t invested in typical above the line marketing; they were invested in a loyalty programme so the basic concept of our business model was transactional marketing to get the first purchase (and in some case lose money on that first purchase) but then use the loyalty programme to engage the consumer. That was our brand.
Our brand investment was all involved in looking after the customer through the loyalty programme to get return direct purchases.
Darren:
It was quite a traditional loyalty programme in that it had a tiered approach; the more you invested, the faster the rewards came back to you. There was nothing tricky but it was delivered in an online real-time platform.
Jon:
The only tricky part was we didn’t try to replicate the airline clubs, which in my opinion are loyalty by entanglement—points and you don’t really know how to use them and so on. We’d give you transparent dollars back on the transaction that you could use immediately so there were no thresholds and all these other sort of tricks that have crept into loyalty programmes as they realise the finances on them aren’t profitable or workable.
Darren:
So you went into Hotel Club running the marketing with a clear view that your role was to get maximum trial and share of market or share of wallet.
Jon:
One of my KPIs was customer lifetime value, which is talked about a lot now. I had two that I really cared about: one was NCM on the transaction. We typically tried to run that at zero, purely as a self-funding acquisition vehicle. At times we would flex it up or down on quarterly targets and so on but that was roughly how we set it.
And then the real metric that made the company money was in moving those people out from Google direct to site through the loyalty programme. We looked at the entire funnel if you like, from the top of the funnel driving traffic through transactional channels right through to repeat purchase and lifetime value.
Darren:
That’s interesting because you’ve got two metrics there. Lifetime value is a longer term but you’ve also got the short-term, quarterly or monthly reporting that you have to do as well. A lot of marketers and especially brand marketers really struggle with that.
We hear a lot about ‘oh, we’re forced into short-termism.’ What do you think of that?
Jon:
I think it’s a real danger. I think the explosion in growth of the online platform (and specifically Google and Facebook) is partly because of these metrics I talked about. The C-Suite wants to understand and measure and has a strong desire to understand the effectiveness of their marketing.
The problem with that is that digital marketing sprays out a whole bunch of metrics and a lot of them are deceptive in terms of the value. They are short-term. In fact, what I’ve observed at large-scale transactional businesses is they often end up circling the bottom of the funnel, typically in a last-click model.
Darren:
This is where paid search can be a real trap can’t it?
Jon:
Yes. Programmatic display, all of these disciplines that rely effectively on math and bid arbitrage to understand the effectiveness. What they all end up doing is circling the same customers. You end up shrinking your overall customer base because every business has some natural level of attrition. All you’re doing is re-targeting your existing customers. You’re on a downward slope.
Darren:
Where in actual fact you need a strategy to grow that base of potential customers.
Jon:
And this is the part I think marketers have missed. Like anything in life, things are circular and I think we’ve corrected towards this notion of metrics and we’re now seeing a pull back towards the realisation that you have to also invest in brand. You have to do it in a way that you can measure. You have to do it in a way that’s effective and there are a lot of bad decisions made under the guise of brand because it’s unmeasurable and unaccountable.
You need to respect the notion that you have to understand how effective your marketing is but what I do see is strong brands perform way better at the bottom of the funnel as well. If you have a strong brand, invest in brand, you see all of your transactional marketing improve and I’ve observed that not only in other businesses that I’ve worked for but also when I’ve spoken to the big digital platforms, the businesses that have great brand also have extraordinarily efficient transactional marketing programmes.
Darren:
It really is this idea of sales and marketing have come closer together with online platforms, haven’t they? The idea of having an online sales team; in many ways marketing can also be responsible. In the case of the Hotel Club and Groupon, your sales team is the online platform.
Jon:
Yeah, marketing has shifted to this very data-centric, number-centric discipline. I think that’s partly because in an online platform or a digital marketplace, you’re able to track your performance of your marketing in real-time. That said, when I look at the big online platforms in the U.S, they’re all hiring CMOs with FMCG background.
If you look at Amazon, they’re now the biggest spender in traditional marketing.
Darren:
Traditional media?
Jon:
Traditional media, yeah, sorry, TV, radio etc. They’re doing that for a reason because Amazon measure everything I assure you. They’re doing it because it has an effect and there is a measurable, positive effect they have managed to tease out. Even Facebook and Google are in the top 5 advertisers in the US so they’re all out there aggressively using “outdated” media vehicles and channels.
Darren:
It’s interesting; really smart retailers have got this. They’ve understood this whole model because the secret to retail, I remember working with a lot of retailers in my advertising career and they’d say ‘listen, Darren, we do promotions to maximise our yield of the potential market in a particular time period. That’s why we have a sale or promotion’.
What we want to do is know there is a certain number of customers and we want to attract the maximum possible in that period but in a month’s time we need to make sure that we top up the people in the marketplace. So, we need to have a long-term strategy, which is build our reputation (that’s brand) so that we increase the top and still convert at the bottom and I think that’s what you’re talking about.
Jon:
It is. And to build on your retail example, also ensure when they’re in your store that you treat them in a way that really reinforces the brand because a personal experience is considerably more impactful than seeing a piece of linear comms for example.
Darren:
So you’ve opened up another area I wanted to chat to you about and that is, brand building often ends up being pushed down to advertising and yet that’s not really where brand occurs is it, it’s customer experience.
Yet marketing departments will often be turned into the promotions department and yet be responsible for short-term sales, long-term brand value, and yet not have any influence at all over the customer experience.
Jon:
I agree. For me the customer experience is the brand, the reinforcement of the brand. In a digital business it’s interesting because there is a common push/pull on this where marketing says, ‘we’re about attracting traffic’ and the product team is about converting it onsite.
In that model the product team is actually your brand team. Yet, the brand team sits in marketing, which is all about driving traffic. In fact, they’ve almost perpetuated that same paradigm. You see businesses trying to solve it with chief customer officers and all these other sort of titles.
Darren:
Chief sales officer, chief revenue officer.
Jon:
Yeah, some C. But the bottom line is (and I don’t know the exact metric but I’ve seen 100s of damn lies and statistics) a good positive customer experience is worth 100 impressions in marketing or communications.
Businesses that get that right and Apple’s a good example (it’s a bit hackneyed and overused) but they figured out their stores aren’t necessarily about maximising the retail footprint; it’s about building their brand.
Darren:
It’s a brand experience when you go in there, whether you go to the junior spa, which is beautifully named, or just the interactions with the retail staff is a brand experience. There is something more rewarding buying an Apple product from an Apple store than buying it just from any Apple reseller.
Jon:
I agree and in fact, I’ve found myself more than once buying it online and then going into the store. It’s a hackneyed example and there are other great retailers out there that do a fantastic job, even online retailers. Zappos is another one. The rough model is this; you can buy 10 shoes and send them all back if you want but guess what, no one does—they keep 3 or 4 of them.
There are also some great brands like Warby Parker, which was a digital online men’s glassware initially. They started investing in retail stores because it’s an embodiment of their brand. And it’s a more impactful way of driving their brand than a digital experience can deliver.
Darren:
You mentioned before that last-click attribution works really well at selling Google and Facebook and programmatic but in actual fact you said it means you end up fishing in the same waters.
Jon:
Circling the end of the funnel.
Darren:
You mentioned measuring brand but how else can you measure because there is something addictive to being able to see on a last click measure; this is performing, this is the ROI, and this is what we’re getting.
Jon:
Absolutely.
Darren:
How do you shift that conversation with a CFO?
Jon:
That’s a good one. Groupon is a great example. When I arrived there they were 100% digital, spending 100s of millions of dollars on transactional marketing and for the first time the numbers of customers had actually dipped over the course of the year so they’d started losing—attrition was greater than acquisition.
When I arrived there, I had to convince the business to invest in the top of the funnel, which was extremely difficult because they were all conditioned on this array of metrics and they were convinced it was the appropriate way of moving forward.
Darren:
This is why the Google model is so good; I bet the solution was we need to spend more.
Jon:
And guess what Google said? There’s a great brand halo when you buy lots more keywords.
Darren:
That reminds me of a story. A CMO phoned me and said, ‘I’ve got to get some transparency with my media agency’. And I said’ what do you mean by transparency?’ They said, ‘my conversation with my media agency feels like this; I’m sitting in the back seat of a car. It’s late at night. There are no lights on and the agency is driving and we’re going 100 miles an hour down the road with the lights off. And I’m saying what are we doing? They’re going don’t worry, we’ve just got to go faster and we’ll get there’.
They were so terrified there was going to be some massive car crash because they couldn’t see where they were going but the only advice they kept getting from their media agency was spend more money, spend it faster because we’ll break through this lack of performance and suddenly magically it will all happen.
Jon:
Media agencies are partly to blame for the issues around traditional media because they’re still measuring it on inputs. They’re still selling it to clients on you’ll reach this many consumers.
Darren:
Impressions, CPMs.
Jon:
Guess what; they’re costs to the CFOs and when they need to hit a target, especially on a listed company every 3 months they cut them because there’s no output value to it. The advent of data, big data, AI and all those buzz words, which I use with a massive pinch of salt, but it works both ways.
The fact that the transactional channels now have access to all this data means that you can apply that same data to traditional media. What we did is build a real-time Media Mix Model so that we fed all of our data into effectively an econometric model but instead of it being this episodic, once in 3 months to justify how well I’m doing, we used it in a way to convert all of those inputs in our traditional media buyers into outputs.
So, suddenly I had a CAC or consumer acquisition cost for every dollar I spent for traditional media. I had a CPGP (cost per gross profit point). So, when the CFO said we’re going to cut your budget by 5 million or whatever it was, I could say ‘well you can do that but you’re going to lose this many customers and this much gross profit.’
You know what he did? He cut Google. Not quite but it changed the dialogue and because people have associated Media Mix Models with being episodic and very complex (and they are complex), that’s one of the challenges relating to Google or Facebook. You throw up some keywords and you’ve got a last-click attribution model.
Darren:
It’s simple.
Jon:
It’s simple.
Darren:
One of the clever things both those platforms have done is they’ve made it very simple to spend money with them and to get back a result—some analysis, some data that tells you it’s going well.
Jon:
Facebook will let you do incremental tests; is your dollar performing as well as you think? Google let you in on their display network; they won’t let you do it on their search network.
Darren:
On paid search.
Jon:
You can guess the reasons why. But the Media Mix Model really gave me optics, the C-suite and certainly the financial team, optics on the full funnel and what was interesting is every time we put our budget in it, it kept trying to scoop money away from search.
One of the key dimensions we used to see was that it would move money from search into TV, radio and these other high-reach traditional media.
Darren:
That’s interesting because that’s what the data was telling you. I’m sure as a marketer and knowing the way you think, you would have built a narrative to make sense of what the data was telling you.
Jon:
Yeah, and as hackneyed as the funnel is, for me it’s a simple and very effective visualisation tool of how marketing works. The benefit I had was we’d already seen what circling the bottom of the funnel meant, which was reducing the number of customers.
I bifurcate the two things. One is narrative based media so you’re telling a story and that’s your traditional media. Then you have transactional media, which is closing that story. And that’s roughly in a very simplistic model how it worked. Inside that you obviously have varying roles but in a very simple world that’s the way I split media up. You need both.
When we started investing in the upper funnel a lot of our traditional transactional marketing started improving so our conversion rates improved so we suddenly started getting a whole bunch more traffic to our site. So, you could see these two things working in concert, working together.
Darren:
It’s as simple as giving the audience a reminder of a reason to buy and then giving them the transaction to buy.
Jon:
What I also like about that is traditional media forces you to think about your narrative and your message. It forces a discipline that a lot of transactional marketers have completely forgotten or dismissed. The programmatic teams for example would barely even look at their creative.
They were pulling products from their catalogue and putting them in a frame and sending them out. They were just sending out at scale, buying 100s of millions of impressions a week and something would stick. You’d get someone at the right time, right place.
But for me that was a miss on our behalf because you’re suddenly saying there are 99 million odd impressions a week that don’t get a click. I’m discounting them; not even valuing them.
Darren:
I saw and I can’t remember who it was but they just put up a whole lot of online ads and before you could even recognise who the brand was or what they were offering there was some price discount. It was like they’d gone so far down the funnel that they were already discounting themselves as a way of getting a conversion.
I think this goes to the very heart of the difference between sales and marketing. Marketing, for me, is about maximising margin, like creating the value of the product; sell it at the best possible price. Sales, at the other end, is just getting the conversion even if I have to discount.
Jon:
Marketing to me is lifetime value or some long-term value. You have to force that discipline on marketers and I agree, sales is just sales. What’s interesting and it used to bug me a bit; again at Groupon, our marketing teams (300 odd people)—200 of them would have been analysts. We decided that analysts made great marketers because they could sort through massive amounts of data.
It bugged me because marketing is a discipline. Would you stack your accounting departments full of comms people? No, you wouldn’t because you believe there’s a discipline there. That was lost a little bit. Again, I’m seeing the pendulum swing back. People are recognising that being able to figure out a message and talk to a consumer for a longer period of time than one click is actually a really important skill.
Darren:
The conversations I’ve had with data analysts say that the most rewarding relationships they have is where they can do the analysis and go to a marketer and have the conversation around ‘look, I’ve seen this’ and have the marketer propose a narrative that fits with that and then they can go and test it.
To bring a human dimension and a story to it and then be able to go back to the data and test it. In fact, Martin Cass at MDC Media Partners, we were talking about the idea of bringing media and creative back together and he said, ‘but it’s not in the old way; here’s the creative idea now what media are we going to stick it in?’
It’s here’s a whole lot of information and data we have about how people consume media and different media products and what they like and don’t like and put that into the top of the process so that the creatives can actually build the messaging around the insights that the media data actually provides.
Jon:
Yeah, I’ve got a couple of things. With the Media Mix Model we’d actually track index traffic 5 minutes after an ad run and that would allow us to understand day part, programme mix, creative, and so it gave the creative team some proper data, not just research data or panel data.
Darren:
Or those briefs that go, ‘yes, we’re targeting grocery buyers with children’—like who is that?
Jon:
We threw up some really interesting outcomes. For example, our best performing ad unit was Nickelodeon at 9.00am Saturday morning to dads, and we know it was dads because we actually tested female versus male here at creative and the dad one worked better so our assumption is that people self-identify.
Our theory was this; dad is on the couch, he’s been given the kids Saturday morning (I know it’s a little clichéd).
Darren:
But it’s a narrative that you’re using to explain what the data is telling you.
Jon:
Yeah and he’s sitting there with his mobile phone and he’s seen an ad (and the product category that went really well was things to do with your kids). And so we’d show dads on go-karts and dads at bowling, and it was our most effective ad unit.
But back to what you were saying about data; it tells you the what. It doesn’t tell you the why. Interestingly, you could play that out to segmentation, like Amazon don’t believe in a traditional consumer segmentation; they have enough behavioural data to predict whatever you want. I’m not sure I agree.
I think there are so many more nuances in human behaviour. Even though Amazon gets a ton of data (more data than most platforms—certainly more than I was getting at Groupon), it still doesn’t really tell you why. There are still things out there that you need to go deeper to understand the real consumer.
Darren:
The other thing, and I know from my own personal experience, is that you buy things, for instance on Amazon, for someone else. This is just fucking with their algorithm because human beings do not always behave in the same way. That’s one of the things I love about behavioural economics and Dan Ariely’s ‘predictably irrational’, is that’s the human condition.
But the more we can get to understanding or at least getting an insight in to why they’re behaving that way, even if it is unreasonable.
Jon:
Absolutely, at Christmas time and around Mother’s Day my Amazon experience shifts completely—they start recommending all this stuff that is completely irrelevant to me other than that one moment in time, that particular occasion.
But if you knew that I was a husband with a family, actually those purchases would have made a tonne of sense.
Darren:
Exactly.
Jon:
I feel like this swing towards data is coming back too. Uber just hired a marketer from Coke as their CMO and I think the digital businesses are realising the fundamentals of marketing are still really required to build a business and a relationship with a customer.
Darren:
It’s not purely an algorithm and it’s not purely a formula because at the end of it there is a human being and understanding that is what’s actually going to build that engagement, build the brand loyalty and build brands.
Jon:
Think about the funnel, the broader consumer base and the broader aspects of marketing.
Darren:
Earlier on you said that brand marketers have done a disservice by saying it’s not measurable. On the other side if you just do the numbers you lack the humanity. We’ve swung one way, now we’re swinging back. It’s about getting the balance right isn’t it?
Jon:
Absolutely. As I said, when we started telling a brand narrative at Groupon, and I should preface this by saying that Groupon was a very different business to the one in Australia. It’s a marketplace of casual dining, things to do, and commodity beauty.
We had a very core target of mums—soccer mums if I was to simplify it—so having an implicit understanding of who she was and why she was behaving that way was really important, not only to affect our brand marketing but then it also started to influence our transactional marketing.
Their model prior to that was just we’re going to spray everything out because impressions are so cheap and wait for the click. While it’s successful on the click, your downstream values begin to reduce. So, if you’re getting the wrong customer they don’t continue to buy.
So we started incentivising the transactional teams not purely on the transaction NCM but also on a downstream value, a lifetime value because attribution systems are simply a way to direct behaviour and they’re all wrong.
It’s just trying to find one that’s less imperfect than the others and just be consistent with it and one that actually directs behaviour the way you want it to go. Because people who are incentivised will follow a metric to the ends of the earth even though it’s a bad result for the business so you have to get that right.
Darren:
Well, Jon, I think your enthusiasms magnified 100 fold from back in the Telstra days—I mean you were an enthusiastic marketer then but clearly your experience with Hotel Club and then Groupon has really just raised that enthusiasm. What’s the future? What are you planning to do now?
Jon:
I’m spending the next few months to move out of corporate life, the corporate hamster wheel and whatever I choose it will be something a little smaller and with high potential for growth, whether it’s myself or with someone else.
Darren:
Fantastic. Good to hear but we’ve run out of time, unfortunately. We’ll hopefully continue this conversation another time. Just before we go, a final question. What’s the difference between being a marketer in the States and a marketer in Australia?
Ideal for marketers, advertisers, media and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley. Find all the episodes here
